Alternative Investments Q2

Alternative investments include assets like:

• Hedge funds

• Private equity

• Real estate

• Commodities

• Infrastructure

These differ significantly from traditional investments like stocks and bonds.

Let's break down the options:

A. Transparency – ❌

Alternative investments are less transparent compared to traditional investments.
They often have complex structures, are not as heavily regulated, and may not provide regular or detailed reporting. For example, hedge funds and private equity funds typically disclose limited information.

B. Liquidity – ❌

Alternative investments tend to be less liquid.
They often have lock-up periods (e.g., private equity or real estate), and there’s not always a ready secondary market. Selling such investments quickly can be difficult without incurring losses.

C. Expected Returns – ✅

Alternative investments are more likely to offer higher expected returns, as compensation for:

• Higher risk

• Iiquidity

• Lack of transparency

• Complexity

These higher potential returns are one of the main reasons investors allocate a portion of their portfolio to alternatives.

🔁 Summary:

Compared to traditional investments, alternative investments tend to offer higher expected returns, but at the cost of lower liquidity and transparency.